FCC Consumer Advisory Committee’s Truth-in-Billing Panel.

In 2004, The FCC Consumer Advisory Committee had a panel to discuss “Truth-in-Billing” issues, meaning are phone bills readable and accurate. The lawyers for the United States Telephone Association (USTA), a lobbying association for the Bell companies and the Cellular Telecommunications and Internet Association (CTIA) spoke. They both agreed that phone bills are readable and that there are not many billing problems.

Teletruth was bumped from presenting a major report on phone bills, which found that over 50% of phone bills have mistakes. In fact, in 2004, research from Teletruth was used to get 50,000 small business customers a hefty refund, since these bills had been missing their small business discounts for over 6 years.

Here is some of the testimony. Notice that we did not include any consumer statements – there are no consumers invited to speak about the problems with phone bills.

Robin Tuttle, Associate Counsel, USTA USTA does believe that the guidelines are working well. Our members, which are primarily wire line local exchange carriers, are not experiencing many billing problems. But when isolated complaints do arise, they are handled.

So we do not believe regulations are needed in lieu of guidelines at this time.

MICHAEL ALTSCHUL, Senior Vice President and General Counsel, Cellular Telecommunications and Internet Association (CTIA) Thank you. And let me join with the others on the panel in thanking you for the invitation to participate. Let me begin by adding my voice to the choir here that we believe that the guidelines and competition have ensured that consumers have the information they need, both to make informed choices and to understand the elements of their bill.

Specifically, as the commission had hoped in the 1999 truth in billing order, the wireless carriers have adopted and implemented a voluntary consumer code that goes beyond the truth in billing rules adopted by the commission.

In particular, our code and the carriers that have committed to the code disclose rates and terms of service to consumers, including whether any additional taxes, fees, or surcharges apply. And they separately identify carrier charges from taxes and surcharges on billing statements that are remitted to government agencies. And this is what a responsible, competitive industry does to benefit consumers.

Our code is available on our Web site, www.ctia.org. It is available electronically from us. If anyone wishes it, contact Andrea Williams. I brought a summary, a little sheet that we printed out just this morning to share with you today.

MS. TUTTLE: Yes, we believe that the goals have worked and that there is not as much customer confusion today about bills as there was five years ago. The principles were helpful for meeting the goals.

And also changes in the industry, for example, things like wire line LECs are not billing as much for other carriers, have helped reduce confusion.

So we do think that things are better.

MR. ALTSCHUL: I basically want to build on what Commissioner Curran has mentioned. In a competitive industry — and most of the industries are competitive with wireless depending on who the author is, extremely competitive if there is such a thing — spend an awful lot of time with focus groups talking to their customers about every aspect of their service in every way the carrier touches the customer relationship.

The billing and the presentation of the information on a bill are a key component in how carriers interact with and satisfy their consumers. They have spent considerable resources in asking consumers how they want information conveyed to them.

We believe that is exactly the right incentive and that carriers, particularly now that we have number portability, where there is ready ability for a customer who is displeased, feels that a carrier has taken advantage of the trust between a consumer and their supplier, if they feel that their trust has been abused, can easily change carriers

So the marketplace has done a very good job. I’m happy to hear that Commissioner Curran has echoed that in Maryland the complaint rate confirms that.

We have become students of the FCC’s complaint rate reports. And we are very proud that the complaint rate per thousand or per million wireless carriers is below the complaint rate of those services that the commission more actively regulates.

So we think that the marketplace based on that empirical data is doing a better job satisfying consumers than the regulatory rules and the services that are more intensively regulated. And that makes sense.

MODERATOR RAGSDALE: Now, you mentioned that you speak with some of the consumers about their particular needs. Can you explain some of the issues that were raised to your attention but might be technical or legal impediments in terms of producing a bill? What issues do you encounter in producing a wireless bill?

MR. ALTSCHUL: Well, of course, any of us who are consumers know that the primary number that consumers care about is the amount you write in a check, right, at the end of the month. It’s not the line items and how the various blocks are put together to build it up but how much am I paying.

Of course, the press and consumer groups have done a very good job — and there are Web sites that also do this — of summarizing and comparing all of the different carriers.

In terms of the impediments that all carriers, especially wireless carriers, face, we have a number of them. First, the service is provided without respect to state jurisdictional boundaries.

So those of us who live in the Washington area know that the wireless markets include Maryland, the District of Columbia, Virginia, sometimes parts of West Virginia and Delaware depending on the carrier.

So a patchwork quilt of different state rules makes it very difficult, costly, inefficient to operate on a market basis. The way consumers use their services is on a multi-state basis. So that is one area of concern.

Another area of concern that has been identified by our wireless tax group is there are more than 14,400 different taxing jurisdictions in the United States, so many different local sales taxes, so many different 911 surcharges.

Many consumers — I must say I live in Arlington County. So it’s easy for me. Our 911 surcharge is set on a county basis, but some are done by districts that don’t necessarily respect county boundaries.

So creating 1,440 different bills and price structures depending on all of the unique taxes that are imposed legally by different tax jurisdictions is a huge technical impediment to wireless carriers, to all carriers.

In addition, the FCC’s universal service fund support mechanism now adjusts the contribution factor four times a year. So every three months there is going to be a change in the amount that consumers are assessed to support universal service.

There is also a number of very worthy and worthwhile mandates imposed by the FCC that all carriers support. There is contribution to the TRS fund, contribution to support number administration.

There is a 25-cent-per-year regulatory fee imposed on wireless carriers to support the FCC, something that I am sure the FCC finds valuable. Prorated that 25-cent user fee is 2 and one-third cents per month. It is remitted to the FCC by carriers, and carriers are collecting it.

Combining all of those individual fees and not giving consumers too much information is one of the things that comes out of these focus groups.

In reviewing the truth in billing order in 1999, I was reminded that the California Public Utilities Commission actually asked that a lot of these individual line items be combined into one line, which is what the industry has responded by doing.

Finally, unlike wire line carriers that often provide service pursuant to tariff, wireless carriers use contracts. We are unable and actually benefit from being detariffed.

Because it is a contract, changes in certain rates and terms, if material, can reopen the contractual relationship. That is a disincentive to both consumers and carriers because both sides benefit from the certainty of a contract in a one or two-year term. And the rewards that come from that loyalty to a particular service provider.

So having a lot of changes that opens up contracts every three months or so, for example, with the universal service fund would be a real impediment to consumer-friendly services.

MODERATOR RAGSDALE: Robin, I would like to ask you the same question with regards to the wire line industry. What type of impediments may you encounter in producing a bill?

MS. TUTTLE: Sure. Actually, our impediments are very similar. I guess I would touch on some of the same points that Mike raised that we would have similar charges to bill for, USF contributions, federal excise taxes, TRS, PIC change charges, as well as any changes that may occur or may be requested, such as changing a font size or a paper size.

Those types of changes can be very costly. They would increase the size of the bill, which adds postage cost and may be only a few pennies per bill, but that adds up when you are doing that for all of your customers.

I think those are probably the most significant of the impediments that we would encounter.